This report, entitled Covid-19 Crisis and Islamic Finance: Response of the Islamic Development Bank Group, is a discussion draft released for the purpose of obtaining feedback to improve its content and recommendations.
The report is coordinated by the IsDB Working Group to Study the Impact of the Covid-19 Pandemic on the Islamic Finance Industry. Following the outbreak of Covid-19 and the resultant impact on IsDB member countries, H.E. Dr. Bandar Hajjar, President of the IsDB Group, formed the Working Group to assess the effects of the pandemic on the Islamic finance industry and showcase the IsDB Group’s response to support member countries.
The report is in two sections. The first section addresses the Covid-19 pandemic from an Islamic-finance perspective, highlighting the extent of resilience and exposure of the Islamic finance industry to the crisis. The second section details the key response actions taken by the IsDB Group to help member countries deal with the Covid-19 crisis.
The report highlights, among other actions, the IsDB Group’s US$2.3 billion Strategic Preparedness and Response Program for Covid-19 that aims to support member country efforts to fight the pandemic and to address the adverse effects on their economies.
With regard to the Islamic finance industry, the report notes that the principles of Islamic finance help ward off endogenously generated crises, like the Global Financial Crisis, and provide a strong safety net against exogenously induced cycles, like the Covid-19 crisis. However, a spectrum of well-functioning institutions is required, but lacking at present, to translate these principles into tangible real-world impact.